Brendan Maton(Moderator), Matt Arnold, CFA(Senior Strategist, SPDR) & Altaf Kassam, CFA(Head of Index Applied Research), MSCI
• BRIC was a useful shorthand for the shift in global economic power away from the developed G7 economies towards the developing world
• But in a world in which it has become apparent that Brazil and Russia are still overly dependent on commodities, Beyond BRIC recognizes that emerging markets face idiosyncratic risks, and investors will be more discriminating… one day.
• The knee-jerk treatment of all emerging markets as one asset class could provide investors, who are looking for new and tactical ways to gain exposure across the emerging markets, with some good entry points
• Sign of indiscriminate nature of sell-off is that Mexico has suffered the greatest proportionate ETF outflows so far this year, even though it is one of the few emerging countries that benefits from problems in China, its chief competitor for manufacturing jobs
• Many of the emerging economies in the SPDR Beyond BRIC UCITS are on a much sounder footing and less vulnerable to any tightening in global financial conditions
o South Korea (16.2% of index), Taiwan (15%), Mexico (12.9%), Malaysia (9.6%), and Philippines (2.06%), Thailand (5.3%).
• Smaller emerging economies’ exports could do much better if equity investors' focus shifts from sales to emerging market consumers back to consumers in the West – most emerging economies are still sustained by western export markets rather than local demand
o Top 10 holdings: Samsung Electronics (3.59%), Taiwan Semiconductor (3.1%), America Movil (2.7%), Naspers (2.2%) and MTN Group (1.9%).